NEW YORK (AP) — Inflation isn’t only costing small businesses money. It’s costing them customers as well.

At the Bushwick Grind Cafe in Brooklyn, New York, Kymme Williams-Davis has raised prices and switched to different types of goods to keep up with the rising costs of milk, coffee, paper goods and plastic, as well as shortages of items such as paper cups and plastic lids. She hasn’t experienced anything like this since opening in 2015.

Williams-Davis says she has lost nearly half of her regular customers. Some have traded down and are buying coffee for $1 at the McDonald’s or bodega on either side of the café instead of paying the $3 she charges.

“If (customers) can get it for a dollar for not that notable of a difference, they’re going next door.”

One customer who had been coming in for years stopped in to tell Williams-Davis he bought himself a coffeemaker.

“He said I’m going to start making coffee at home, I need to budget, so I won’t be coming in here every day,” she said. “I feel like I’ve been on a goodbye campaign.”

Inflation has been rising at nearly the fastest pace in 40 years, driven up by strong consumer spending and higher costs for food, rent, medical care, and other necessities.

On Tuesday, the government is expected to report that price increases slowed in August compared with a year ago, largely because of a steady drop in the cost of gas. Prices for other items, particularly food, are likely to keep rising quickly. Overall, economists forecast consumer prices rose 8.1% in August, compared with a year ago, down from 8.5% in July, according to data provider FactSet.

For much of the pandemic, small business customers were largely tolerant of price increases and kept on spending. But now owners say they’re seeing some pushback.

Ninety-seven percent of small business owners say inflationary pressure is the same or worse than it was three months ago, according to a survey of more than 1,500 small businesses by Goldman Sachs 10,000 Small Business Voices. Sixty-five percent have raised prices to offset higher costs. And 38% say they’ve seen a decline in customer demand due to price increases.

Nicole Miskelley, who manages PMR, an auto and diesel repair shop in Marion, Illinois, said she has seen customers delay repairs that aren’t urgent such as scheduled maintenance or getting new tires.

At the beginning of the year, Miskelley’s labor costs rose 12% and the cost of towing cars to the shop went up due to higher gas prices. Parts are more expensive too. Last year, an air conditioner processor would cost her $200, but this year she can’t find one for under $400. So, she’s had to raise her average price for a repair by 30% to 40%.

Her customers have noticed.

“Typically, I am able to joke about how drastically different things are now and most agree with me,” she said. “On occasion, I deal with push back,” including the rare bout of yelling or cursing by a customer.

“Among a lot of my older customers, who are on restricted income like Social Security, they say they have to cut back,” she said. “They say, ‘I know I need these tires, but I need to make a couple more rounds (of Social Security) to save up.’”

She says she’s a little worried but hopes people can adjust to inflation.

“Right now , it kind of sucks because costs increased faster than I could catch up with. In time, I hope people budget better and their incomes change to reflect the economy.”

The pullback is more dramatic among consumers with less discretionary income. Walmart says its customers, who tend to have lower incomes, are spending more on food and less on other items. Small business owners are seeing much of the same.

Kim Shanahan operates the online store Gifts Fulfilled in Berlin, Maryland, which sells gift baskets and care packages and employs people with disabilities.

“Last year has been challenging to say the least,” she said. “All prices across the board have gone up.” Everything from cardboard, containers and the food that she includes in the baskets have become more expensive.

She implemented a 5% increase to cover some costs. After she raised the price of her most popular get-well gift basket called “One Tough Cookie,” from $27.50 to $28.95, sales went down, she said.

Less expensive baskets, such as those with gifts and candy that sell for $25 and under, have been the most affected, with unit sales down about 50% in 2022 compared with last year. “The whole segment of the market is gone for us,” she said.

“We are a ‘want to-’ not ‘have to-’ have item in our primary categories,” Shanahan said. “What we sort of see is people maybe buying a $50 gift dropping down to $35. And the whole lower tier aren’t even buying at all, they don’t have the discretionary funds.”

Schuyler Northstrom of Uinta Mattress, a mattress maker in Salt Lake City, Utah, says he’s raised his prices by 15% since 2020. A mattress that used to sell for $289 wholesale is now $330.

The increase doesn’t fully cover Uinta’s higher costs. Raw materials such as springs and foam have increased by 40%. But Northstrom fears that raising prices any higher could cause his customers to drop him.

“The pushback from retailers is pretty strong there,” he said. His retail partners include John Paras mattress stores and 2Brothers Mattress, both in Utah. “Sometimes we’re displaced by some of the larger guys with a lower cost product because of their volume.”

To adapt, Northstrom is redesigning the mattress to cut down on costs, and taking less profit, which isn’t sustainable in the long term, he said. He’s also focusing more on the higher end, mattresses that cost up to $1,200, which hasn’t been hit as hard.

“We’re feeling it, we’re not a necessary purchase, people buy food and gas,” he said.

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CUPERTINO, Calif. (AP) — Apple’s latest line-up of iPhones will boast better cameras, faster processors, and a longer lasting battery — all at the same prices as last year’s models, despite inflationary pressure that has driven up the cost of many other everyday items.

That pricing decision, revealed Wednesday during Apple’s first in-person product event in three years, came as a mild surprise. Many analysts predicted Apple would ask its devout fans to pay as much as 15% more to help offset rising costs for many components.

The hoopla surrounding Apple’s new iPhone 14 models is part of a post-Labor Day ritual the company has staged annually for more than a decade. Wednesday’s event was held on the company’s Cupertino, California, campus at a theater named after company co-founder Steve Jobs. After Apple CEO Tim Cook strolled out on stage, most of the event consisted of pre-recorded video presentation that the company honed during previous events staged during the pandemic.

For several years, Apple’s new iPhones have mostly featured incremental upgrades to cameras and battery life, and this year’s models were no exception. Pricing for the standard iPhone 14 will start at $799; the deluxe iPhone 14 Pro Max will start at $1099.

Among the latest improvements is a 48-megapixel camera in the Pro and Pro Max models that the company said will produce especially crisp pictures. The iPhone 13 versions of the Pro and Pro Max have 12-megapixel cameras. This year’s high-end models will also have always-on displays that stay lit even when the device is locked, a feature that has long been available on many smartphones powered by Google’s Android software.

Beginning in November, all the iPhone 14 models will be able to send SOS messages via a new satellite feature — a safety measure intended to let users request help when in remote areas without a wireless connection.

All the iPhone 14 models also will include a motion senor capable of detecting serious car crashes and automatically connecting to emergency services.

With inflation still hovering at its highest level in 40 years, consumers have curbed their spending on many discretionary items. That’s likely contributing to a recent decline in smartphone sales, although the iPhone has fared far better than competing Android devices .

The dimming sales outlook prompted the research firm International Data Corp. to predict a worldwide decline in 2022 smartphone shipments of 6.5%, almost double the 3.5% decline it had estimated a few months ago. Despite that anticipated drop in sales, the average price for new smartphones is expected to finish this year about 6% higher than last year, IDC estimated.

By keeping iPhones prices the same, Apple faces the potential risk of undermining its profits if inflation drives up its own costs. It’s a hit that the company could easily afford, given it has reaped $44 billion in profits through the first half of this year.

Apple could also end up fatten its bottom line if more consumers looking upgrade their mobile devices gravitate to the high-end Pro and Pro Max models, which generate bigger profit margins than the cheaper models. And it appears Apple is anticipating a growing number of consumers will will be prepared to pay an additional $200 to $300 for deluxe versions of the iPhone 14, said Wedbush Securities analyst Daniel Ives.

Apple’s stock price gained 1% Wednesday to close at $155.96.

Consumers have already been snapping up iPhones this year, even though Apple charges among the industry’s highest prices. Apple sold an estimated 106 million iPhones through the first half of this year, an 8% increase from the same time last year, according to Canalys, another research firm.

Forrester analyst Thomas Husson hailed the new lineup for its faster chips, improved design and “some incremental innovative features.”

The company’s Apple Watch Series 8, meanwhile, will include a new temperature sensor intended to help women retrospectively track their ovulation cycles in addition to the crash detection feature also debuting on the iPhone 14. The price for the latest Apple Watch, available in stores Sept. 16, will start at $399, the same as last year’s model.

In an effort to broaden the appeal of wearable technology, Apple is rolling out a Watch Ultra model designed to be more durable and offering a variety of special features tailored for hikers, scuba divers and other outdoor enthusiasts. The Watch Ultra, available in stores Sept. 23, will carry a premium price of $799.

CCI Insight analyst Leo Gebbie predicted that the Ultra will compete with existing sports watch brands like Garmin and some luxury Swiss watchmakers that market their products around extreme sports.

Apple also took the wraps off its next generation of wireless earbuds, the AirPods Pro 2, which will also maintain a starting price of $249.

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WASHINGTON (AP) — Consumers struggling with skyrocketing prices for food, gas, autos and rent got a tantalizing hint of relief last month, when prices didn’t budge at all from June after 25 straight months of increases. With gas prices continuing to fall, inflation is probably slowing further this month.

So has the worst bout of inflation in four decades possibly peaked? Economists say it’s too soon to know for sure. Even if inflation has peaked, it will likely remain high well into next year.

Since inflation ignited early last year, it has temporarily slowed before, only to re-accelerate in later months. When that happened last fall, Federal Reserve Chair Jerome Powell was forced to jettison his description of higher prices as being merely “transitory” and to acknowledge that high inflation was proving to be chronic.

Even if some prices should keep declining, others — housing costs, for example — are almost sure to remain painfully high. And that means there’s likely still a long way to go before inflation will get anywhere close to the 2% annual pace that the Fed has targeted and that Americans were long accustomed to.

On Wednesday, the government reported that consumer inflation jumped 8.5% in July from 12 months earlier. That was an unexpectedly sharp slowdown from the 9.1% year-over-year inflation rate in June, which was the largest in four decades. But it was still quite high.

So-called core prices, which exclude the volatile food and energy categories to produce a better picture of underlying inflation, also rose more slowly: They increased 0.3% from June to July, less than the 0.7% rise from May to June. Over the past 12 months, core prices rose 5.9%, the same as in June.

Here are some questions and answers about inflation:

____

WHERE IS INFLATION HEADED?

That’s hard to say, because there are multiple signs pointing in both directions.

In addition to the ongoing decline in gas prices, the cost of groceries — a huge driver of inflation for the past year — could soon rise much more slowly. Futures prices for dairy, chicken and eggs have been falling in recent weeks, according to Capital Economics, a forecasting firm. And costs for such farm commodities as wheat, corn and soybeans are also well off their springtime peaks.

Many supply chain snarls are loosening, with fewer ships moored off Southern California ports and shipping costs declining. That should help reduce the cost of furniture, cars and other goods. Prices for appliances are already falling.

In addition, Americans’ expectations for future inflation fell last month, according to a survey by the Federal Reserve Bank of New York, likely reflecting the drop in gas prices that is highly visible to most consumers.

Inflation expectations can be self-fulfilling: If people believe inflation will stay high or worsen, they’re likely to take steps — such as demanding higher pay — that can send prices higher in a self-perpetuating cycle. But the New York Fed survey found that Americans’ foresee lower inflation in future years than they did a month ago.

____

ARE THERE SIGNS INFLATION COULD STAY HIGH?

Plenty. Inflation is a byproduct of broad economic trends — too much money chasing too few goods, in the classic economic view — not merely whether individual industries are struck by supply shortages or other problems.

One trend that may be keeping Fed officials up at night is that companies are still hiring workers at a voracious pace — and are willing to pay more to find the people they need. In the April-June quarter, employees’ wages and salaries, excluding government workers, jumped 1.6%, matching a two-decade high that was reached last fall.

Businesses typically pass on at least some of their higher labor costs to their customers in the form of higher prices. But if workers become more productive — if they use more technology, say, or a company streamlines operations — a business can pay more and make up for the higher costs through greater efficiency rather than through higher prices for customers.

Unfortunately, for the first half of this year, the opposite has happened: Productivity has tumbled and wages, adjusted for declining efficiency, have been growing at double-digit levels. Economists say that means further pay increases would have to be passed on to consumers through higher prices. And those price increases would fuel continued high inflation.

“This is way above anything we’ve seen since the high inflation of the early 1980s,” said Peter Hooper, head of economic research at Deutsche Bank Securities, referring to labor costs. “The danger here is that you’re entering into a wage-price spiral, that increasing wage costs are pushing up prices further and making it that much more difficult to actually bring down inflation to a more desirable level.”

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WHAT’S CAUSED THE SPIKE IN INFLATION?

Good news — mostly. When the pandemic paralyzed the economy in the spring of 2020 and lockdowns kicked in, businesses closed or cut hours and consumers stayed home as a health precaution, employers slashed a breathtaking 22 million jobs.

Everyone braced for more misery. Companies cut investment and postponed restocking. A severe recession ensued.

But instead of sinking into a prolonged downturn, the economy staged an unexpectedly rousing recovery, fueled by vast infusions of government aid and emergency intervention by the Fed, which slashed short-term interest rates.

Suddenly, businesses had to scramble to meet demand. They couldn’t hire fast enough to fill job openings or buy enough supplies to meet customer orders. As business roared back, ports and freight yards couldn’t handle the traffic. Global supply chains seized up.

With demand up and supplies down, costs jumped. And companies found that they could pass along those higher costs in the form of higher prices to consumers, many of whom had managed to pile up savings during the pandemic.

Critics blamed, in part, President Joe Biden’s $1.9 trillion coronavirus relief package, with its $1,400 checks to most households, for overheating an economy that was already sizzling on its own. Many others assigned a greater blame to supply shortages. And some argued that the Fed kept rates near zero far too long, lending fuel to runaway spending and inflated prices in stocks, homes and other assets.

____

HOW ARE HIGHER PRICES AFFECTING CONSUMERS?

It’s hitting most people pretty hard, even if they have received pay raises. On average, weekly paychecks, adjusted for inflation, fell 3.6% in July compared with a year ago.

For lower-income families, economic research shows that the hit is typically harder. Poorer Americans are more likely to spend a greater proportion of their incomes on items that have increased the most in price in the past 18 months: Food, gas and rent.

There are also subtler differences that can make inflation harder for those earning less. Many people can’t afford the kind of bulk purchases of groceries that can help higher-income households economize.

Paola Becerra, 40, who lives in Stamford, Connecticut, has started to miss doctor’s appointments to use the money instead for groceries or gas.

“My groceries for just one week are now never below $100,” she said. “And I can’t buy in bulk because I don’t have a big fridge.”

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WASHINGTON (AP) — Three checkered oil regimes that President Joe Biden and past U.S. leaders have spectacularly snubbed — Venezuela, Saudi Arabia and Iran — are now targets of U.S. outreach as global fuel prices reach jarring levels during the Ukraine crisis.

But it’s not clear any U.S. diplomacy could get more crude oil on the market fast enough to help the current supply crunch, or tear once-shunned oil states away from what — for Saudi Arabia in particular — are profitable alliances with Russia.

For the Biden administration, the U.S. overtures to three problematic oil giants at best could lead to stabilizing rising oil and gas prices and draw those governments closer to the West and away from Russia and China. At worst, Biden risks humiliating rebuffs and condemnation for outreach to governments accused of rights abuses and violence.

“We have an interest globally in maintaining a … steady supply of energy, including through diplomatic effort,” Secretary of State Antony Blinken said Wednesday on the moves toward countries that have been out of U.S. or Biden administration favor, and in the case of Iran an armed threat. “We have a multiplicity of interests, and use diplomacy to try to advance them.”

The phrasing, as Russia’s war raises the stakes in many areas, was a change from Biden’s pointing, at the outset of his presidency, to democratic values as “America’s abiding advantage” in diplomacy.

Saudi Arabia has profited richly in recent years from teaming with fellow top petroleum producer Russia to keep global oil and natural gas supply modest and prices high.

And Biden came to office vowing to isolate the crown prince, Mohammed bin Salman, and the rest of the Saudi royal family over abuses that include the 2018 killing of U.S.-based journalist Jamal Khashoggi.

Biden and the young crown prince are not known to have ever talked.

“I don’t know whether he’s up to eating that much crow,” Saudi Arabia analyst David Ottaway said of attempts now by Biden to improve his administration’s relations with Prince Mohammed and Saudi Arabia, the country that could most easily end the global supply crunch. “He was gonna make a pariah of this guy.”

As for Iran and Venezuela, the U.S. would welcome positive diplomatic outcomes that bring back oil from those nations, but “the problem is that in that situation, their negotiation power increases dramatically,” said Claudio Galimberti, senior vice president of analysis at Rystad Energy.

“So Iran will make a lot of very steep requests in order to rejoin the deal and so would Venezuela,” the energy analyst said. Plus, it could take time to ramp up their production.

Russia’s devastating military invasion of Ukraine, and resulting market disruptions and sanctions hitting Russia’s petroleum exports, helped drive the U.S. average gasoline price to $4.25 on Wednesday.

Biden announced a ban on Russian oil and gas imports the day before, compounding high prices from the OPEC production cap engineered by Saudi Arabia and non-OPEC member Russia.

The Biden administration is making cautious overtures to all three oil giants, Venezuela, Iran and Saudi Arabia.

In the case of Iran, administration officials are not publicly linking their diplomacy to oil, although they are pursuing a deal on Iran’s nuclear program that could see international sanctions on that country lifted and Iran’s oil quickly back on the market legally.

For Biden, failure in the high-profile oil diplomacy risks humiliating treatment from unfriendly rulers abroad, potentially re-election-damaging condemnation at home.

And success? Potentially, likewise.

“Our response to (Russian President Vladimir) Putin’s war shouldn’t be to strengthen our relationship with the Saudis,” tweeted Minnesota Democratic Rep. Ilhan Omar, citing Saudi Arabia’s years-long war in neighboring Yemen.

Others in Biden’s Democratic Party have made clear their objections to any abrupt U.S. embrace of Saudi Arabia and its crown prince for the sake of oil.

The GOP is scathing in its criticism of high oil prices, and any possible thaw with Iran in particular.

Effectively, said Richard Goldberg, a former National Security Council official under the Trump administration, the Biden administration is saying, “They will still be financing terrorism, but let’s go ahead and buy their oil.”

Western nations are hoping their cuts in the use of Russia’s oil can pressure Putin to stop his attack on Ukraine, though that can create other problems since nations produce different types of oil, which need different kinds of refineries.

In Venezuela, a high-level U.S. delegation visited last weekend for the first time since relations unraveled under socialist leader Hugo Chavez in the 1990s.

The trip appeared to be met receptively by President Nicolas Maduro. It was followed Tuesday by Venezuela releasing two jailed Americans.

The apparent warming raised the possibility of a lifting of U.S. sanctions on Venezuela and eventual return of its oil to markets.

But even if that breakthrough occurs, Venezuela’s oil industry might not be ready to ramp up production in time to help the current price spike, after years of political turmoil and disinvestment cramped the industry.

Removing direct and secondary U.S. restrictions on Venezuela’s state-owned oil company, if it happens, could boost production by 400,000 barrels per day within a few months, said Paul Sheldon, chief geopolitical advisor at S&P Global Commodity Insights.

For Iran, leading countries are in the possible closing days — one way or the other — of talks with the Iranians in Vienna aimed at reimposing limits on Iran’s nuclear program in exchange for lifting sanctions, including those that keep Iranian oil off the market.

The Trump administration had taken the U.S. out of the nuclear deal.

Iran could supply oil quickly, and has the ability to put more than 1 million barrels per day on the market, according to energy analysts.

However, Iran’s oil is more likely to go to other buyers than the U.S. And if the U.S. allows Russia to freely trade with Tehran, it could create an opening for Moscow to “launder” oil sales through Iran, which could export the oil it might have refined and instead refine Russian oil in its place, according to Clearview Energy Partners.

Meanwhile, despite a decades-old strategic alliance between Saudi Arabia and the United States, including the kingdom’s dependence on the U.S. military and U.S. weapons-makers for defense, Prince Mohammed and King Salman show no eagerness to help the Biden administration out of the jam.

Biden early on vowed to make a “pariah” out of Saudi Arabia’s ruling family over the killing inside the Saudi consulate in Istanbul of Khashoggi. The U.S. intelligence community linked it to the crown prince.

But the oil tightening has led Biden officials to reach out more to the kingdom this year, including a Biden call to the aging king last month.

“We’re not going to separate our values and our interests,” Blinken told reporters Wednesday. “We’ve made that clear in everything we’ve done. But we’re working productively, constructively with those countries.”

Saudi Arabia and the United Arab Emirates together could tap an additional 2 million barrels per day if they chose. The United Arab Emirates said Wednesday it will urge OPEC to consider boosting oil output. But some OPEC nations may be reluctant to increase production to make up for Russian shortfalls, since alienating Russia could make it harder for OPEC to wield its influence over oil prices.

Personalities aside, “the oil alliance between Russia and Saudi Arabia has worked out pretty well,” said Ottaway, the Saudi Arabia analyst.

“It’s a difficult decision for MBS too, you know,” he added. “Both MBS and Biden are in a bind here.”

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The increases imposed Friday boost the cost of Netflix’s most popular U.S. streaming plan by $1 to $14 per month, while a premium plan that allows more people to watch the service on different screens simultaneously will now cost $2 more at $18 per month. Netflix’s basic U.S. plan remains at $9 per month. It marks Netflix’s first price changes in the U.S. since an increase rolled out early last year.

New U.S. subscribers will be charged the higher prices immediately, while the increases will affect existing customers in phases during the next few months. Netflix ended September with 73 million subscribers in U.S. and Canada, with the overwhelming majority located in the U.S.

The move had been widely expected after Netflix raised its prices in Canada earlier this month and then ended free 30-day trials in the U.S.

Netflix’s price hike comes amid a surge in worldwide growth as efforts to contain the novel coronavirus closed down restaurants, theaters and other entertainment venues. The Los Gatos, California, company gained 28 million worldwide subscribers during the first nine months of the year, already eclipsing its growth for the entire year of 2019. This year’s subscriber increases included an additional 5.4 million customers in the U.S. and Canada.

But the price increases may test the bounds of Netflix’s popularity, especially if the pandemic-driven recession deepens and forces more U.S. households to curtail their spending.

After Netflix raised its U.S. prices early last year, the streaming service suffered a decline of 130,000 subscribers in the U.S. and Canada from the end of March to the end of June.

Netflix is also facing more competition than ever, including deep-pocketed rivals that include Amazon, Apple, Walt Disney and AT&T. And several of those plans are far less expensive than Netflix’s U.S. plan.

For instance, Disney’s rapidly growing streaming service charges just $7 per month for access to a library that includes some of the most beloved films of all time.

Apple’s year-old streaming service costs just $5 per month for a relatively small selection of TV series and films, but the iPhone maker is trying to extend its reach by pouring more money into programming and bundling with its some of its other services. For instance, a plan that includes video, music, video games and online storage is being offered for $15 per month, or just a $1 more than Netflix’s most popular stand-alone plan.

“We understand people have more entertainment choices than ever and we’re committed to delivering an even better experience for our members,” Netflix said in a statement. “We’re updating our prices so that we can continue to offer more variety of TV shows and films.”

The higher prices should help lift Netflix’s profits, a prospect that investors like. But Netflix’s stock fell more than 5% to close Friday at $475.74 amid another down day in the overall market. Netflix’s shares have climbed by nearly 50% so far this year, thanks largely to its robust growth amid the pandemic.

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